Cash Course Vocabulary

Vocabulary flashcards generated from Days 1 through 3 of the Cash Course vocabulary notes.

Budget

A plan that tracks money earned, spent, and saved.

Savings

Amount of money set aside for future expenses.

Income

Total of all money earned in a given period of time.

Needs

Things that are absolutely necessary.

Wants

Things that are enjoyed but not essential.

Budgeting

The process of creating a plan to track and manage money earned, spent, and saved, ensuring financial resources are allocated effectively to meet goals and obligations.

50-30-20 Method

A budgeting strategy that allocates $50\%$ of income to needs, $30\%$ to wants, and $20\%$ to savings and debt repayment, providing a balanced approach to managing essential and discretionary expenses.

Incremental budgeting

A budgeting approach where adjustments are made gradually to the current budget based on changes in income or expenses, often by small, periodic modifications to better reflect financial realities.

Envelope budgeting

A cash-based budgeting system where funds are divided into physical envelopes labeled for different spending categories, limiting expenditure to the cash available in each envelope to control spending.

Zero-based budgeting

A budgeting method where all income is allocated from scratch at the beginning of each period, requiring each expense to be justified, ensuring every dollar has a purpose and aligning expenditures with current financial goals.

Savings Account

Account designed to earn interest and save money.

Emergency Fund

Savings for covering unexpected expenses.

Nest Egg

Savings for building wealth for the future.

Deposit

Adding money to a financial account.

Withdraw

Removing money from a financial account.